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Faction pulls out of Israel government

( AP ) - A hawkish faction in Prime Minister Ehud Olmert's coalition pulled out of the government on Wednesday, weakening him at a time when he needs broad support to reach a peace deal with the Palestinians by the end of the year.

The withdrawal of Yisrael Beiteinu's 11 lawmakers from the government leaves Olmert with a majority of 67 in the 120-seat parliament.

"Negotiations on the basis of land for peace is a fatal mistake," Avigdor Lieberman, head of the faction, told a news conference.

Olmert spokesman Mark Regev said he had no immediate comment. Ruhama Avraham, a member of Olmert's Kadima Party, said the government would "overcome this."

Lieberman's decision came just days after Palestinian and Israeli negotiators began tackling the core issues of their conflict - final borders, sovereignty over disputed Jerusalem, and the fate of Palestinian refugees who lost homes in Israel during the war that broke out following the Jewish state's creation in 1948.

He had repeatedly threatened to leave the government if these issues were broached.

"If we pull back to the 1967 borders, everyone should ask himself, what will happen the following day," Lieberman said. "Will the conflict stop, will the terror stop? Nothing will change."

The ultra-Orthodox Shas Party with 12 lawmakers has also threatened to leave if Israel agrees to any compromise over Jerusalem, whose eastern sector Israel captured in the 1967 Mideast war. Palestinians claim east Jerusalem as the capital of a future state.

Israelis and Palestinians relaunched talks after seven years of violence at a U.S.-sponsored Mideast conference in November. The leaders pledged to try to reach an agreement before President Bush leaves office a year from now.

Olmert had tried to persuade Lieberman to stay in the government in a meeting with him on Tuesday. But Yisrael Beiteinu decided in a meeting Wednesday to leave, Lieberman said.